What is a UTGO bond?

What is a UTGO bond?

Unlimited tax general obligation (UTGO) bonds (also called voted debt) must be approved by 60% of the voters, with a voter turnout equal to at least 40% of those who voted in the most recent general election.

What does UTGO mean?

UTGO

What are revenue bonds used for?

Revenue bonds are used to finance municipal projects that generate revenue (a toll road or bridge, for example). This revenue is used to make interest and principal payments to the bond holders. Often, states and their subdivisions create certain agencies and authorities to perform specific tasks.

How do municipalities pay back bonds?

The most common issuers of G.O. bonds are states, cities and towns, and school districts that rely on the local municipalities that belong to the school district to guarantee payment. Revenue bonds are a type of muni that are repaid using the revenues from the projects the bonds helped fund.

What is a Cinderella loan?

Cinderella Bonds are bonds that are initially issued on a taxable basis but that are reissued as tax-exempt bonds upon the occurrence of a certain event.

How is guaranteed revenue debt repaid?

The issuer guarantees repayment of the money in one of two basic ways: Taxation: such as income taxes, property taxes, sales taxes, etc.

Can municipal bonds be refinanced?

Bond refinancings or “refundings” are used by state and local governments most frequently to achieve debt service savings on outstanding bonds. Taxable advance refundings of tax-exempt or taxable bonds are still permitted.

What are risks of bonds?

Risk Considerations: The primary risks associated with corporate bonds are credit risk, interest rate risk, and market risk. In addition, some corporate bonds can be called for redemption by the issuer and have their principal repaid prior to the maturity date.

Are revenue bonds guaranteed?

The repayment of revenue bonds is guaranteed only by revenues obtained by the projects that were subsidized using the bonds. Tax revenues are not used at all.

How does a Cinderella bond work?

Under a Cinderella Bond structure, a borrower is still advance refunding existing bonds, but because the refunding bonds are taxable until the call date, there are no longer two sets of tax-exempt bonds outstanding until the call date, thereby, avoiding a doubling of the federal government’s tax subsidy.

What are voted debt (Utgo) bonds?

Unlimited tax general obligation (UTGO) bonds (also called voted debt) must be approved by 60% of the voters, with a voter turnout equal to at least 40% of those who voted in the most recent general election.

What are limited tax general obligation bonds (ltgo)?

Limited tax general obligation (LTGO) bonds (also called “councilmanic” bonds or non-voted debt), may be issued by a vote of the legislative body. Because the voters have not been asked to approve a tax increase to pay for the principal and interest, general fund revenues must be pledged to pay the debt service on LTGO.

What are the different types of general obligation bonds?

There are two basic kinds of general obligation bonds: Limited tax general obligation (LTGO) bonds (also called “councilmanic” bonds or non-voted debt), may be issued by a vote of the legislative body.